White SW Computer Law Intellectual Property, Information Technology & Telecommunications Newsletter - September 1997

The Copyright Act allows the Commonwealth, or its authorised representative to use copyright works supplied to it free of copyright restrictions. The terms of the use of such works must be decided between the copyright owner and the Commonwealth or by the copyright tribunal. In the matter of Marine Engineering & Generator Services Pty Ltd v The State of Queensland (Queensland Emergency Services), Marine Engineering had prepared a log which was to be used in the recording of maintenance of emergency generators and supplied a copy to QES. QES proceeded to distribute copies of the log to many parties, including competitors of Marine Engineering. Marine Engineering, after notifying QES that it was infringing Marine Engineering's copyright, made an application to the Copyright Tribunal to determine a suitable licensing fee and was awarded $3,900.00. Although the Commonwealth has greater scope for the use of copyright works, it still has an obligation to obtain the permission from a copyright owner before using the works.

In the matter of David Fasold & Anor v Allen Roberts & Anor, Fasold claimed, amongst other things, that Roberts authorised the reproduction of a drawing from a book written by Fasold which details the boat shaped formation near Mount Ararat thought to contain remnants of Noah's Ark. Although the diagram is only a small part of Fasold's book, the fact that the diagram is based upon a large amount of information contained in the book led the Court to find that by copying the diagram, a substantial part of the work had been reproduced. Damages of $2,500.00 were awarded against Roberts. However, Ark Search Inc, an organisation unconnected to Roberts but which had distributed Robert's brochure and newsletter was found not to know or not reasonably expected to know that the use of the diagram in the publications constituted an infringement of Fasold's copyright and hence were not liable. When assessing the meaning of a “substantial part” of a work, the quality, and not the quantity of the material reproduced is examined. You may be liable, depending on the circumstances, if you distribute infringing materials even though you did not create the infringing reproduction.

If you use remixed tracks of musical works in your multimedia products, you should bear in mind that in some cases you can pay a statutory licence fee for such use, however, if your remix is found to debase the original version then the remix will not be licensed and hence a copyright infringement occurs. In Schott Musik International GMBH & Co & Ors v Colossal Records of Australia Pty Ltd & Ors, Schott appealed an earlier decision that a techno dance version of a classical composition did not debase the original. The Court dismissed the Appeal and maintained its broad approach in interpreting the meaning of “debase” as it found the techno dance version was different in style and approach and did not detract from the original. If you are using an adaptation of a work under a statutory licence you should consider whether the remix would debase (ie cause a reasonable person to think less of) the original work and therefore be in breach of the Copyright Act.

In an appeal of the decision in Sega Enterprises Ltd & Anor v Galaxy Electronics Pty Ltd & Anor, Galaxy unsuccessfully argued that the images created by the computer programs in a video game cartridge did not fall under the definition in the Copyright Act of “cinematographic film”. The court reaffirmed that video games cartridges have additional copyright protection for the actual “moving” images produced on the screen in addition to the copyright and integrated circuit layout protection already available for the programming code and screen layout. The court found that Galaxy had illegally imported into Australia, a cinematographic film of which Sega was the copyright owner. This decision means that Sega is entitled to prevent a party importing into Australia its computer game cartridges.

The matter of Acohs Pty Ltd v R.A. Bashford Consulting Pty Ltd, Risk Management Concepts Pty Ltd and Bialkower, examines the potential liability which may arise following false allegations being published in a newsletter. Bashford Consulting and RMC published a newsletter (using their business name of Risk Management Solutions) which featured an article that incorrectly claimed that Chemwatch (Bialkower's business name) had been successful in litigation against Acohs for copyright infringement. The Court found that Bialkower had provided RMS with the information for the story and did not correct the false statements in the draft copy of the article provided to him. Acohs was successful in its claim against RMS, RMC and Bialkower for misleading and deceptive conduct under the Trade Practices Act. The Court awarded Acohs $20,000.00 damages plus costs. Bialkower was found to have contributed to a greater extent than Bashford Consulting and RMC and was ordered to pay 75% of the damages and costs awarded to Acohs in addition to one third of Bashford Consulting and RMC's legal costs. Despite the fact that you believe a statement to be true, if a statement is false, and is made in trade or commerce, you may be found to have engaged in misleading and deceptive conduct.

If your firm takes over a project, you should ensure that the owner of the Intellectual Property involved with the project is determined before the contracts are signed. In the Federal Court Appeal, Devefi Pty Limited v Mateffy Perl Nagy Pty Ltd, Devefi unsuccessfully appealed against an earlier decision that found Devefi had infringed Mateffy's copyright by using plans to continue a building project Devefi took over. Mateffy had produced structural work drawings for the original project owners and had included a term in their agreement, which prevented the licence granted to use the drawings from being transferred to another party. The original project owner had gone into liquidation around the time of the sale of the project to Devefi and Mateffy had not been paid in full for its services. A purported assignment of the rights from the original project owner to Devefi was held not be valid. One wonders if Mateffy would have pursued the claim if they had been paid by the original project owner. Indeed, the Court ordered that should Mateffy receive a dividend from the liquidator, it would have to account to Devefi for that dividend. The requirement for a copyright assignment to be in writing is an important consideration when considering the purchase of an existing project or business, which will involve the transfer or use of Intellectual Property rights. To simply use intellectual property without permission from the owner invites litigation. Any software developer taking over an existing project should make careful enquiries with respect to the intellectual property rights of the supplied materials.

In a recent US Circuit Court of Appeals matter, the question of whether an offer to sell items which infringe a trade mark is unlawful if no goods were actually sold. In the matter Levi Strauss v Shilon, Shilon, who had offered to sell counterfeit Levi labels and jeans to a undercover investigator hired by Levi was unsuccessful in his appeal. Shilon claimed, amongst other things, that because he had made a “naked offer” to sell goods, that is, no goods were sold or produced, he was not liable under the Lanham Act. The Court ruled against Shilon on all his points of Appeal. If you are exporting goods to the US, you should consider whether your product or firm name will infringe a US trade mark. The Lanham Act in addition to unfair competition and trade mark dilution laws can make an unresearched marketing effort an expensive exercise.

In the US matter of Blake Hall v Brad LaRonde, Hall was successful in his appeal against a trial court's decision to deny Hall the right to sue LaRonde, who lived in New York in a California court. Normally, a person in the US is not subject to the jusridiction of a State in which they have had no minimal contacts. Hall, who was a software developer, had originally contacted LaRonde by e-mail and had entered into a contract with LaRonde which authorised LaRonde to sell licences for Hall's software. LaRonde failed to pay Hall the licensing fee as had been agreed and Hall sued LaRonde in a Californian Court. The Court of Appeal found that the use of e-mail and telephone by LaRonde to contact Hall established sufficient minimum contacts in California. It is feasible that an American individual or firm may seek to sue an international party on the basis that e-mail negotiations subject the international party to the jurisdiction of the US Courts. In all agreements that you sign, you should state which legal jurisdiction you want the agreement to be governed by. This can have important consequences, not only from the viewpoint of being sued in a foreign Court, but you may also want to consider which jurisdiction affords you the most favourable protection, for example, a longer period of copyright protection.